IHS Markit expects Philippine gross domestic product (GDP) to expand below the government’s target this year as the recent surge in coronavirus disease 2019 (Covid-19) cases is likely to constrain economic recovery.
In a report on Friday, IHS Markit Asia Pacific chief economist Rajiv Biswas said GDP growth for the country in 2021 is estimated to be in the 5- to 6-percent range.
His forecast falls outside the government’s official estimate range of 6.5 to 7.5 percent, but a reversal of the Philippine economy’s revised 9.6-percent slide last year.
“While the Philippine economy is still expected to show a positive growth rebound in 2021, the near-term outlook for the Philippines economy has been dampened by the sharply rising wave of new Covid-19 cases since mid-March 2021,” Biswas stressed.
The rising Covid-19 cases since mid-March has prompted the government to impose the enhanced community quarantine in NCR Plus or the National Capital Region and adjacent provinces of Bulacan, Cavite, Laguna and Rizal. It started on March 29 and was extended until April 11.
The strict strict Covid-19 pandemic control measure, according to Biswas, is expected to constrain the pace of economic recovery in the near term.
“Consequently, the pace of economic recovery in 2021 is likely to be less buoyant than previously expected, with renewed pandemic control measures constraining the momentum of growth recovery in the near term.”
The economist cited, in particular, the latest IHS Markit Philippines Manufacturing Purchasing Managers’ Index, which already fell to 52.2 in March from 52.5 in February. The survey showed evidence of increasing price pressures. Companies also indicated that higher costs incurred by firms were often traced to materials shortages.
He further said the Philippines also confronts significant challenges in vaccinating its population with Covid-19 vaccines due to difficulties in obtaining sufficient vaccine supplies as well as the logistical problems of implementing a large-scale vaccination rollout nationwide.
Biswas added the Philippine government had planned to vaccinate 70 million individuals by end-2021, but so far only 827,000 persons have received their first vaccination dose as of April 5.
“A key problem confronting the Philippines, like many other developing countries, is that it is relying on imported vaccine supplies and is therefore vulnerable to supply disruptions due to ‘vaccine nationalism,’ as some nations with vaccine production facilities prioritize supplies to their own domestic populations due to the mounting human toll of the pandemic,” he emphasized.
Going forward, Biswas said IHS Markit is forecasting stronger GDP growth in 2022 as the Covid-19 pandemic is gradually constrained by widening vaccine rollout in the Philippines, resulting in more normal economic conditions.